This translation has been automatically generated and has not been verified for accuracy.The results for Canadian and global purchasing manager surveys will be released this week and they remain vital for investors, although now for entirely different reasons.
The PMI data this week, including Canada’s on Wednesday, will almost certainly be awful. Results for the European Union have already been reported at record lows, below the 2009 level.The terrible results, however, won’t be surprising and are therefore unlikely to cause significant moves in equity markets.
Indicators like PMIs matter of course in the sense they reflect economic hardship for real people. From a strictly investment standpoint, the data remain important but entirely in the sense that they establish a baseline from which we can look for a positive inflection point. It almost doesn’t matter how bad it gets – asset markets have already priced in a lot of negativity. Investors will be waiting for the bottom in order to buy when the data begins to improve.
Morgan Stanley biotechnology analyst Matthew Harrison threw some cold water on the more optimistic scenarios late last week. Mr. Harrison noted that his base case for the U.S. - 200,000 COVID-19 cases with the number peaking in 20 to 30 days – might be too low because of the rapidity of the virus spread on the country’s east coast. This opens the door to his bearish forecast, in which 20 to 40 per cent of Americans contract the virus.
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